Washington Prime Group Provides Department Store Update
October 12 2018 - 7:00AM
Washington Prime Group Inc. (NYSE: WPG) continues to proactively
manage its exposure to department stores situated within its Tier
One and Open Air assets. This has been accomplished by the
continued redevelopment of WPG owned department store space as well
as the acquisition of space owned by retailers, including Sears.
These capital allocation decisions continue to further the
Company’s dominant secondary town center mandate via differentiated
adaptive reuse where sales volume increases up to threefold.
Lou Conforti, CEO and Director of Washington
Prime Group stated: “Two weeks ago we decided to once again raise
the bar as it relates to department store visibility in particular
and overall corporate transparency in general. During the Bank of
America Merrill Lynch Global Real Estate Conference we supplemented
our institutional investor presentation with a detailed progress
report on every single one of the 28 department store spaces we
consider ‘at risk’, which includes Sears exposure, in our Tier One
and Open Air portfolio, excluding those spaces owned by Seritage or
other non-retailers. In summary, we are actively planning
redevelopment and/or are in discussions for 24 of the 28 spaces.
The aforementioned presentation is available on the investor
relations section of our website.”
Conforti added: “We’ve worked diligently to
address unproductive department store space over the previous
couple of years and recent reports of an imminent Sears bankruptcy
filing shouldn’t come as a surprise to any landlord unless they own
a few Zayre or E.J Korvette locations trapped in a space-time
continuum where the Sansabelt clad relax on shag carpeting,
illuminated by the warm glow of a lava lamp while they drink Tang
and vodka and listen to The Moody Blues.”
Washington Prime Group has, in anticipatory
fashion, accomplished the following:
- Total traditional department store exposure has decreased by
nearly 50% since 2015 when factoring all announced department store
closings, additional Sears locations in the Tier One and Open Air
portfolios identified for future redevelopment, and Noncore
assets;
- Sears exposure has declined by 78%, or 47 locations, since 2015
when factoring all announced Sears store closings, additional Sears
locations in the Tier One and Open Air portfolios identified for
future redevelopment and Noncore assets;
- Washington Prime Group owns all save for three of the
aforementioned 28 spaces which allows for control to unlock future
redevelopment opportunities;
- During 2018, the Company proactively gained control of eight
Sears locations at Tier One assets;
- Revenue derived from Sears as of September 30, 2018, equates to
a paltry 0.8% of total annualized minimum rent for the total
portfolio; and
- The Company has allocated approximately $300 million to $350
million of capital necessary to retrofit the aforementioned 28
spaces over a three to five year period. These costs are included
in the Company’s previously announced anticipated redevelopment
spend of approximately $100 million to $125 million per annum. This
excludes 13 spaces owned by third parties such as Seritage Growth
Properties.
Conforti stated: “Tenants which have failed to
evolve in order to satisfy an increasingly savvy consumer do not
belong in our assets. For those who embrace this necessary
dynamism, respect their demographic constituencies and practice
good old fashioned merchandising, we will bend over backwards by
providing our robust infrastructure to ensure their success.
Dillard’s is one such example of a department store retailer that
is continually evolving and beta testing new product offerings
whether it be their successful vintage handbag rollout or any
number of exciting initiatives which target a specific
audience.
“Bottom line: Washington Prime Group has and
will continue to act as both a prudent asset and risk manager as we
subject capital allocation decisions from both an absolute and
relative (compared to our other investment opportunities)
standpoint; and dispose of assets we deem as unproductive e.g.
those which do not warrant a marginal unit of capital. We have the
financial wherewithal to redevelop department store boxes which
satisfy our ROIC parameters as well as result in the repositioning
of the asset as the dominant town center within its catchment. In
addition, we need to disabuse the farcical notion of a Sears
bankruptcy filing (whether or not it comes to fruition) will come
as a surprise to us. We have taken the appropriate financial,
operational and strategic measures, and as a result regard such
events as an opportunity.”
About Washington Prime
GroupWashington Prime Group Inc. is a retail REIT and a
recognized leader in the ownership, management, acquisition and
development of retail properties. The Company combines a national
real estate portfolio with an investment grade balance sheet,
leveraging its expertise across the entire shopping center sector
to increase cash flow through rigorous management of assets and
provide new opportunities to retailers looking for growth
throughout the U.S. Washington Prime Group® is a registered
trademark of the Company. Learn more at
www.washingtonprime.com.
ContactsLisa A. Indest, CAO
& Senior VP, Finance, 614.887.5844 or
lisa.indest@washingtonprime.com Kimberly A. Green, VP, Investor
Relations & Corporate Communications, 614.887.5647 or
kim.green@washingtonprime.com
Forward-Looking StatementsThis
news release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
which represent the current expectations and beliefs of management
of Washington Prime Inc. (“WPG”) concerning the proposed
transactions, the anticipated consequences and benefits of the
transactions and the targeted close date for the transactions, and
other future events and their potential effects on WPG, including,
but not limited to, statements relating to anticipated financial
and operating results, the company’s plans, objectives,
expectations and intentions, cost savings and other statements,
including words such as “anticipate,” “believe,” “plan,”
“estimate,” “expect,” “intend,” “will,” “should,” “may,” and other
similar expressions. Such statements are based upon the
current beliefs and expectations of WPG’s management, and involve
known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance, or achievements of WPG to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, without limitation: changes
in asset quality and credit risk; ability to sustain revenue and
earnings growth; changes in political, economic or market
conditions generally and the real estate and capital markets
specifically; the impact of increased competition; the availability
of capital and financing; tenant or joint venture partner(s)
bankruptcies; the failure to increase mall store occupancy and
same-mall operating income; risks associated with the acquisition,
(re)development, expansion, leasing and management of properties;
changes in market rental rates; trends in the retail industry;
relationships with anchor tenants; risks relating to joint venture
properties; costs of common area maintenance; competitive market
forces; the level and volatility of interest rates; the rate of
revenue increases as compared to expense increases; the financial
stability of tenants within the retail industry; the restrictions
in current financing arrangements or the failure to comply with
such arrangements; the liquidity of real estate investments; the
impact of changes to tax legislation and WPG’s tax positions;
failure to qualify as a real estate investment trust; the failure
to refinance debt at favorable terms and conditions; loss of key
personnel; material changes in the dividend rates on securities or
the ability to pay dividends on common shares or other securities;
possible restrictions on the ability to operate or dispose of any
partially-owned properties; the failure to achieve earnings/funds
from operations targets or estimates; the failure to achieve
projected returns or yields on (re)development and investment
properties (including joint ventures); expected gains on debt
extinguishment; changes in generally accepted accounting principles
or interpretations thereof; terrorist activities and international
hostilities; the unfavorable resolution of legal proceedings; the
impact of future acquisitions and divestitures; assets that may be
subject to impairment charges; significant costs related to
environmental issues; and other risks and uncertainties, including
those detailed from time to time in WPG’s statements and periodic
reports filed with the Securities and Exchange Commission,
including those described under “Risk Factors”. The
forward-looking statements in this communication are qualified by
these risk factors. Each statement speaks only as of the date of
this press release and WPG undertakes no obligation to update or
revise any forward-looking statements to reflect subsequent events
or circumstances. Actual results may differ materially from
current projections, expectations, and plans, if any.
Investors, potential investors and others should give careful
consideration to these risks and uncertainties.
Washington Prime (NYSE:WPG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Washington Prime (NYSE:WPG)
Historical Stock Chart
From Sep 2023 to Sep 2024